India has been cutting solar-power costs to a record low by pushing developers into auctions, which has been key to avoid the lowering renewable energy subsidies that have hurt the European market. Under the program, the Indian government proposed to purchase solar power at 15,390 rupees per megawatt-hour for 25 years. Companies then bid to sell at a discounted rate in a process known as a reverse auction. Those with the lowest rates win, and are able to build solar plants with capacities of as much as 20 megawatts each. The latest national auction was held on December 2, with the lowest bid from Solairedirect SA, one of France’s largest solar producers. The bid offered to sell photovoltaic electricity for $147 a megawatt-hour (7,490 rupees). That price is 30% below the global average for solar projects.
The auction’s results for over $700 million of projects demonstrates that the price for solar power in India is close to the cost of coal-fired generation, closing the gap between the two faster than expected. Solar power may equal the cost of fossil fuel-based electricity as early as 2014 or 2015 if prices continue to fall at the rate seen in India over the last year. In clean energy auctions in Brazil, Uruguay and Peru, wind farm and solar park developers have won contracts to supply power at rates close to or below fossil fuel based power.